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Fiscal treatment of tablets provided to employees
We are now seeing more and more employers providing their employees with tablets. The fiscal treatment of tablets (eg Ipads) provided by employers to their employees differs from country to country. In some countries, tablets may be provided tax free (under certain conditions), in others tablets qualify as taxable wage. Therefore, it is important for multinationals to know the fiscal consequences before providing the tablets to prevent any unseen or additional financial burden. Taxand’s Global Compensation Tax team provides a review of the fiscal treatment of providing tablets to employees in countries across western Europe and the US.
Most countries in western Europe have legislation for the fiscal treatment of tablets. In general there are two fiscal treatments of tablets provided to employees: 1) the tablet may be provided tax free if certain conditions are met (such as business use, akin to computers), or 2) the (private use of the) tablet qualifies as taxable wage.
Tax free tablets
Most countries treat tablets in the same way as computers. In general, the tablets are then not considered taxable wage so long as they are, (partly), used for business purposes.
In Portugal, no specific taxation rule is provided for computers, such as a tablet and thus not wage taxable. However, in Portugal where employees sign an internal form stating that they will use the computer for professional purposes only, if they exceed a certain threshold on internet costs, the employee agrees to pay the excess to the employer.
Similarly, in Austria no guidelines for the fiscal treatment have been issued (yet), but it is assumed that the tablets are considered to be ‘notebooks’. The tablets do not qualify as taxable wage if they are used regularly for business purposes. Extensive private use may be taxed as a benefit in kind.
Denmark, Ireland, Luxembourg, the Netherlands, Norway, Sweden, and the UK consider tablets as computers. The private use of tablets is not considered to be a taxable benefit (in kind), as long as the tablets are (mainly) used for business purposes. In Denmark, if the employer provides both a computer and a tablet, the employer must provide a business case for these provisions.
Tablet provision as a taxable wage
In Ireland, the provision of a tablet is not considered a taxable wage in case the private use is incidental. In Sweden, the private use of tablets is not subject to wage tax in the case that the private use is limited (and cannot be separated from the employment), and the employees require a tablet to carry out their duties. In Luxembourg and the Netherlands, there is no taxation in the case that the private use of the tablet does not exceed 10% usage.
Switzerland does not consider the private use of a company tablet as taxable wage. Only the provision of a tablet is considered to be taxable wage.
Tablets provided in Germany and Spain are, under certain conditions, not considered to be taxable wage. To qualify for this exemption, in Spain the tablet must allow connection to the Internet, while in Germany the ownership of the tablet must remain with the employer. The percentage of private use does not matter. The Spanish legislation is temporary at least until the end of 2013.
In Belgium, Finland, France and Italy tablets are not considered to be a taxable wage as long as they are used 100% for business purposes. Therefore, any private use of tablets provided to employees in Belgium, Finland, France and Italy will be considered a taxable wage and will be subject to wage tax and social security contributions. Whereas in Belgium a benefit in kind of EUR 180 on an annual basis must be taken into account, in Finland, France and Italy the actual private use will be subject to wage tax and social security contributions.
Whereas countries across western Europe treat tablets in the same way as notebooks, the tablets are treated as mobile phones in the US. The provision of the tablets will not be subject to wage tax and social security contributions in case the tablets are provided for non-compensatory business purposes. Under these circumstances private use will not be subject to wage tax and social security contributions. In case the provision is considered to be an incentive for the employee, this exemption does not apply.
Poul Erik Lytken
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Miguel C Reis
T. +351 226 158 861
T. +1 214 438 1013
We recommend that multinational companies investigate the relevant fiscal legislation before providing tablets to their employees. In countries where limited private use (incidental/10%) is not subject to tax, we recommend including a draft addendum to the employment contract or a single contract for the use of the tablet that is in accordance with local legislation.
In countries where private use is considered to be taxable wage, we recommend reviewing the legislation and discussing with your local tax authority, to determine the amount that should be reasonably taxed for private use.